China enhances backing to strengthen SMEs and hasten innovation
China has implemented a range of initiatives aimed at supporting small and medium-sized enterprises (SMEs), reinforcing their economic stability and promoting innovation. With an emphasis on technological advancements, financial assistance, and supportive policies, the government seeks to strengthen the capabilities of SMEs and encourage sustainable growth.
TroibNews 
China is escalating its support for small and medium-sized enterprises (SMEs) as part of a wider strategy aimed at stimulating the economy, fostering innovation, and enhancing the capabilities of these businesses.
New measures have been introduced to foster the development of innovative SMEs, particularly "little giant" firms—specialized SMEs focusing on niche markets that utilize advanced technologies—and unicorn companies. The Ministry of Industry and Information Technology has stated that this support will concentrate on technological advancements, digital transformation, financing, and international collaboration.
Funds from the central government will be directed to innovative SMEs and "little giant" firms to help them develop new products, strengthen supply chains, and drive innovation. On the other hand, unicorn companies will receive support in areas such as public listings, mergers and acquisitions, restructuring, and exploring cutting-edge fields like brain-computer interfaces and 6G technology.
"These firms play a vital role in fostering new, high-quality productive forces," remarked Wang Jiangping, vice minister at MIIT. "We will focus on helping these enterprises expand their markets and unleash their full potential."
As of now, China has nurtured approximately 141,000 innovative SMEs, which includes around 14,600 "little giant" firms, according to MIIT data. In the first eight months of this year, larger SMEs demonstrated steady growth, with a year-on-year increase of 7.1 percent in value added. Profits in 19 out of 31 major manufacturing sectors rose, highlighted by a 34.2 percent increase in automobile manufacturing and an 18.7 percent increase in the textile sector.
At an auto parts manufacturer in Zhengzhou, Henan Province, a car seat is produced every 90 seconds. During the first eight months of this year, the company experienced an 80 percent year-on-year rise in orders, with profits doubling in the same timeframe.
"We've applied environmentally friendly materials and implemented a flexible production line design, continuously improving efficiency and boosting profits," stated Song Xiaomin, an executive at Zhengzhou Faurecia Automotive Parts Co., Ltd. "By the end of this year, we plan to add two more production lines."
Zhang Zhongyong, director of the Small and Medium Enterprises Research Center at the China Academy of Information and Communications Technology, remarked that the recent policy initiatives have opened significant opportunities for SMEs' growth.
"Expectations for sectors such as automobile manufacturing and textiles continue to improve, and many SMEs are positioning themselves to move up the value chain," he noted.
In terms of financial support for SMEs, China is implementing various financing initiatives to address their needs. Financial institutions are encouraged to consider factors like quality management and brand reputation when assessing loan applications, a strategy designed to improve access to capital.
Additionally, the government is advocating for equity financing, funds, and bonds to diversify financing channels. The policy for loan renewal without principal repayment, which was previously exclusive to micro and small enterprises, will gradually extend to medium-sized businesses.
Hu Dongchen, co-founder and CFO of Syi Tsing Energy Tech, a start-up focusing on software and hardware solutions for energy storage networks, highlighted that the implementation of principal-free loan renewal policies could significantly benefit their operations.
"It takes time for national policies to be issued and implemented by banks, but if the policy of loan renewal without principal repayment is fully realized, it will directly support the company operations," Hu expressed to CN. The company, which is exploring green energy initiatives, places a high value on the stability and consistency of policies and regulations.
"We hope that legal protections for the non-public economy can be effectively implemented," added Hu. "Stability and consistency in policies, laws and regulations are also crucial for us."
Recently, the government released guidelines to address payment delays on government-funded projects, which will assist SMEs in avoiding liquidity challenges. A national platform has been established for SMEs to lodge complaints, with provisions to penalize deceitful actions by project participants.
Zhang Wen, president of the Beijing Financial Court, emphasized the importance of regulatory, industrial, and judicial cooperation in supporting SMEs.
"Technology companies make up a significant proportion of SMEs. Their growth often demands high investments, extended timelines, and comes with considerable risk and uncertainty," Zhang Wen stated.
"And they still largely rely on indirect financing methods, such as bank loans, making it difficult and costly for them to access necessary funds. This highlights the need to broaden financing channels for SMEs to better support their growth and innovation," she added.
Zhang Qicheng, chairman of Caitong Securities Co. Ltd., addressed the necessity of making policies straightforward and actionable for businesses.
"Policies need to be transformed into standardized, integrated, and user-friendly guides that businesses can follow effectively," he commented. "Our focus should be on providing comprehensive financial services, supporting SMEs through their full lifecycle."
Allen M Lee contributed to this report for TROIB News
New measures have been introduced to foster the development of innovative SMEs, particularly "little giant" firms—specialized SMEs focusing on niche markets that utilize advanced technologies—and unicorn companies. The Ministry of Industry and Information Technology has stated that this support will concentrate on technological advancements, digital transformation, financing, and international collaboration.
Funds from the central government will be directed to innovative SMEs and "little giant" firms to help them develop new products, strengthen supply chains, and drive innovation. On the other hand, unicorn companies will receive support in areas such as public listings, mergers and acquisitions, restructuring, and exploring cutting-edge fields like brain-computer interfaces and 6G technology.
"These firms play a vital role in fostering new, high-quality productive forces," remarked Wang Jiangping, vice minister at MIIT. "We will focus on helping these enterprises expand their markets and unleash their full potential."
As of now, China has nurtured approximately 141,000 innovative SMEs, which includes around 14,600 "little giant" firms, according to MIIT data. In the first eight months of this year, larger SMEs demonstrated steady growth, with a year-on-year increase of 7.1 percent in value added. Profits in 19 out of 31 major manufacturing sectors rose, highlighted by a 34.2 percent increase in automobile manufacturing and an 18.7 percent increase in the textile sector.
At an auto parts manufacturer in Zhengzhou, Henan Province, a car seat is produced every 90 seconds. During the first eight months of this year, the company experienced an 80 percent year-on-year rise in orders, with profits doubling in the same timeframe.
"We've applied environmentally friendly materials and implemented a flexible production line design, continuously improving efficiency and boosting profits," stated Song Xiaomin, an executive at Zhengzhou Faurecia Automotive Parts Co., Ltd. "By the end of this year, we plan to add two more production lines."
Zhang Zhongyong, director of the Small and Medium Enterprises Research Center at the China Academy of Information and Communications Technology, remarked that the recent policy initiatives have opened significant opportunities for SMEs' growth.
"Expectations for sectors such as automobile manufacturing and textiles continue to improve, and many SMEs are positioning themselves to move up the value chain," he noted.
In terms of financial support for SMEs, China is implementing various financing initiatives to address their needs. Financial institutions are encouraged to consider factors like quality management and brand reputation when assessing loan applications, a strategy designed to improve access to capital.
Additionally, the government is advocating for equity financing, funds, and bonds to diversify financing channels. The policy for loan renewal without principal repayment, which was previously exclusive to micro and small enterprises, will gradually extend to medium-sized businesses.
Hu Dongchen, co-founder and CFO of Syi Tsing Energy Tech, a start-up focusing on software and hardware solutions for energy storage networks, highlighted that the implementation of principal-free loan renewal policies could significantly benefit their operations.
"It takes time for national policies to be issued and implemented by banks, but if the policy of loan renewal without principal repayment is fully realized, it will directly support the company operations," Hu expressed to CN. The company, which is exploring green energy initiatives, places a high value on the stability and consistency of policies and regulations.
"We hope that legal protections for the non-public economy can be effectively implemented," added Hu. "Stability and consistency in policies, laws and regulations are also crucial for us."
Recently, the government released guidelines to address payment delays on government-funded projects, which will assist SMEs in avoiding liquidity challenges. A national platform has been established for SMEs to lodge complaints, with provisions to penalize deceitful actions by project participants.
Zhang Wen, president of the Beijing Financial Court, emphasized the importance of regulatory, industrial, and judicial cooperation in supporting SMEs.
"Technology companies make up a significant proportion of SMEs. Their growth often demands high investments, extended timelines, and comes with considerable risk and uncertainty," Zhang Wen stated.
"And they still largely rely on indirect financing methods, such as bank loans, making it difficult and costly for them to access necessary funds. This highlights the need to broaden financing channels for SMEs to better support their growth and innovation," she added.
Zhang Qicheng, chairman of Caitong Securities Co. Ltd., addressed the necessity of making policies straightforward and actionable for businesses.
"Policies need to be transformed into standardized, integrated, and user-friendly guides that businesses can follow effectively," he commented. "Our focus should be on providing comprehensive financial services, supporting SMEs through their full lifecycle."
Allen M Lee contributed to this report for TROIB News
